The grand buildings of Pall Mall, just off Piccadilly in the heart of London, are the stuff of Victorian history. The Reform Club, the Royal Automobile Association and the Travellers' Club have all been home to the great and the good of the British establishment whether writers, poets, politicians or spies.

Last Tuesday morning one of the gentlemen's meeting places was to be witness to the making of a piece of world history. At a quiet table nestled among the pillared grandeur of the Travellers' Club, seven men sat down to talk.

From Libya were three men. Musa Kousa, head of external intelligence for Colonel Muammar Gadaffi, Abdul Ati al-Obeidi, Libya's ambassador to Rome, and Mohammed Azwai, ambassador to Britain.

From Britain were William Ehrman, director general for defence and intelligence at the Foreign Office, and his colleague, David Landsman, head of counter proliferation.

Also attending were two senior officials from the Secret Intelligence Services, MI6.

The meeting lasted for six hours. The men were there to discuss a text that would be presented by the Libyan Foreign Minister later that week making it clear that Gadaffi was no longer interested in developing weapons of mass destruction.

There were disagreements, over the use of the word 'programme' and over what, exactly, Gadaffi was agreeing to.

The British officials made it clear that this historic move would only work if there was clarity in the statement.

As the different wordings were thrown back and forth, all present knew they had a long working relationship to fall back on. This was the 'trust factor' that made the deal possible.

The three men in the Libyan team had also negotiated the complex deal between America, Britain and Libya over Lockerbie. That had been resolved to all sides' satisfaction.

All believed that this would be as well.

When the meeting split up, the final texts were sent to Tony Blair and Foreign Secretary Jack Straw. Sir Nigel Sheinwald, Blair's chief foreign policy negotiator, also discussed the wording with US National Security Adviser Condoleezza Rice in a series of lengthy telephone calls.

Last Thursday morning, Sheinwald called a meeting at Number 10 with Ehrman and the two MI6 officials. They agreed that a telephone call, the first, between Blair and Gadaffi could speed up the process.

At midday, the call was put through. It lasted for 30 minutes, with Blair giving reassurances that if Gadaffi supported the statement there would be an immediate and positive response from London and Washington. But it had to be absolutely clear what Gadaffi was saying. No more WMD.

There were negotiations about the wording to be hammered down, but then late on Friday afternoon the fruits of two years of negotiations finally emerged in a televised statement from Libya's Foreign Minister in Tripoli saying that his country would immediately conform to the Chemical Weapons Convention and to protocols put together by the International Atomic Energy Agency.

In short, it would end its clandestine nuclear, chemical and biological programmes and agree to 'verification inspections' by international adjudicators.

It was the culmination of two years of talking, horse trading and negotiations - a process that began a few weeks after the destruction of the World Trade Centre on 11 September 2001. In October that year a group of Libyan diplomats slipped unnoticed into Britain, led by Libya's ambassador to Rome.

Within the delegation was a man with an unenviable reputation in the UK - Kousa; the same man who would be welcomed at the Travellers' Club.

Kousa was an unlikely visitor to the UK. An expelled diplomat and an intelligence official, he was suspected by both MI5 and the French government of co-ordinating terrorism. But he was about to become the key negotiator in efforts to bring Libya back from being a pariah state.

Kousa first came to notoriety in 1979 when he became head of the Libyan mission and de facto Libyan ambassador to Britain, delivering an astonishing interview to Times journalist Michael Horsnall in 1980 that amounted to an announcement of intent to commit murder.

Speaking in his capacity as the secretary of the Libyan People's Bureau, he openly pledged his support for the IRA and declared that Libya would carry out the assassinations of two Gadaffi opponents on British soil.

'The revolutionary committees decided last night to kill two more people in the United Kingdom,' Kousa told the shocked journalist. 'I approve of this. They are resident in Britain. I do not know how it will be done or if it will be soon.'

He said the two men were former government employees who had misappropriated funds, but who now represented themselves as opposition figures. 'We don't like breaking the law here but we are fighting these people because they worked against our revolution,' said Kousa.

They were comments that led Kousa to be declared persona non grata by then Tory Deputy Foreign Secretary Sir Ian Gilmour; an announcement that was greeted by cheers in parliament.

Kousa was subsequently expelled, but while he had talked up the possibility of killing dissidents, intelligence officials were aware other colleagues wereactually carrying out assasinations, in a spate of killings of Libyan dissidents across Europe.

Two opponents of the regime were found dead in London and several more in other European cities, among them BBC World Service journalist Mohammed Ramadan, who was shot on 11 April 1980 as he left Regent's Park mosque in central London.

But if Britain was delighted to see the back of Kousa it was clear even in the mid-Nineties that he was still a continuing source of worry to the UK's intelligence services for running agents in Britain.

In a confidential profile of Kousa, prepared by MI5 in December 1995, he was described in unflinching terms as the head of the 'principal intelligence institution in Libya, which has been responsible for supporting terrorist organisations and for perpetrating state sponsored acts of terrorism'.

The document went on to describe him as the 'head of Al Mathaba, the Libyan centre for anti-imperialist propaganda which has funded third world guerrilla groups'.

MI5 noted that Kousa was also wanted in France for his involvement in the blowing up of a French airliner, UTA 772, in 1989 over Niger with the loss of 170 lives.

What was even more surprising, as Kousa stepped off the plane at Heathrow in October 2001, was the identity of the officials he was going to meet. They included the Italian Deputy Foreign Minister, the chairman of the North Africa department at the US state department, and the US ambassador in London, as well as officers in the CIA and MI6.

Ostensibly the meeting the delegation of diplomats would attend would cover the on-going negotiations over reparations for the Lockerbie bombing. This would culminate in last week's meeting in the Travellers' Club and the historic deal.

Moreover Kousa's arrival in the UK in October 2001 would signal a seismic shift in relations between Libya and the outside world; not least in the effective 'recruitment' of Libyan intelligence for the war on terror. A dangerous enemy had come on side, and with him, as a pledge of the sought-after alliance, he was carrying a pile of documents, detailing the names of Islamist terrorists in Africa, Europe and the Middle East and details of the 'cells' into which they were organising.

It was the beginning, say sources, of Libya's discreet enrolment in President George Bush's war on terror: a role in which, say sources, Libya would provide 'exceptional help' and ultimately would culminate in Friday's deal to pave the way for lifting the sanctions against the country.

As the meeting wore on, Kousa's delegation would thrash out the preconditions for the lifting of crippling unilateral sanctions against his country - a carefully stepped series of quid pro quos - that would bring Libya back in from the cold.

On the American side the demands were straightforward. Washington presented Kousa and his colleagues with a list of more than 40 Libyan intelligence agents it accused of co-ordinating terrorist attacks. Among the agents it wanted 'retired' was Lt Col Abdallah Senusi, deputy head of Libyan intelligence, also wanted in connection to the bombing of the French airliner.

As the meeting wore on the Libyans were told there was one final pre-condition for the end of the crippling sanctions imposed against Tripoli without which no US Congress would vote to proceed. Libya must finally revoke all ambitions for programmes of weapons of mass destruction.

They are programmes, in any case, that Libya could ill afford. According to experts, including John Pike at Globalsecurity.org, despite a 25-year effort to develop a nuclear weapon, Libya's programme still remains in the embryonic stage. It has succeeded only in providing some training to a number of students and technicians, and the establishment of a nuclear research reactor, which operates under International Atomic Energy Agency (IAEA) safeguards at Tajura, southeast of Tripoli.

Libya's biological weapons programme too has suffered from similar mismanagement and lack of funds, say sources; at best succeeding in producing munitions boobytrapped with human faeces that can be fatal if it enters the blood stream. Instead, real concern has focused on Tripoli's retention of chemical weapons - believed to be about 100 tonnes of mustard gas at the last audit, and an intermittent programme to acquire a long-range missile capability.

Few analysts believe that Libya's chemical capability is a threat to any but its own citizens on whom it has been used, while its missile capability is also feeble.

When Jane's magazine assessed Libya's missiles capability in the mid-1990s it estimated that the country had around 50 Scud A missiles. 450 Scud Bs and 20 longer range Scud Cs, in addition to about 80 battlefield missiles, none of them were WMD.

What was crucial about last week's deal was not neutralising a threat, but persuading Libya to symbolically renounce it.

For the real issue of Libya's WMD is as much about US politics as it is about a genuine threat. Crucially for Libya, which has been campaigning for a lifting of US unilateral sanctions, to follow the formal lifting of UN sanc tions last month - no US Congress would approve the ending of American sanctions, until Libya had renounced its WMD and accepted a regime of intrusive inspections. To earn its reward for its active assistance in the war on terror, Libya had a final hurdle to leap. Early this year Gadaffi offered to renounce WMD in an exchange for an end to US sanctions.

It was a remarkable offer. Bush and Blair discussed it during their summit at Camp David in March. Even with the distractions of war in Iraq, which was due to start in days, the two men realised that a great diplomatic shift was taking place in another part of the Middle East.

As the Iraq war and its aftermath rumbled on, the contacts intensified including Gadaffi's son Saif, who travelled to Britain for talks under the auspices of an oil energy conference sponsored by the Foreign & Commonwealth Office. Blair and Bush discussed the issue again in June, while Straw and Blair discussed the endgame of the announcement at the European summit in Brussels last weekend.

On Friday Libya cleared that final hurdle in its televised announcement that it had given up its WMD. At 10pm, Tony Blair announced the deal to television crews from the BBC and Sky who had been called to a house in the grounds of Durham Cathedral but not told why. When Gadaffi called the announcement from Tripoli 'wise', and one that would go towards 'building a world free of weapons of mass destruction', Blair knew enough had been done.

Speaking live Blair called Gadaffi courageous and said that the process of investigating what programmes Libya had would be 'transparent and verifiable'.

A few minutes later, President George Bush, also in a live television address, said that the move was of 'great importance'.

The US is now expected to drop its economic sanctions against Libya; a move that will bring millions of dollars of development and trade money flooding into Gadaffi's country.

'Libya had to be shown that a move like this will get results,' said one Downing Street official. 'We have to show that diplomacy can work.'